Sub-prime mortgage

[PeroW-Cheney]

What is it that I don't understand about this issue? I don't get it.

As far as I can tell, interest rates were at 30 or 40 year lows and a bunch of people bought homes they could never afford using adjustable rate mortgages. Of course rates will go up after historic lows. DUH! Why somebody would get an adjustable rate mortgage instead of a 30 year fixed rate baffles me. You'll never be able to borrow that much money so cheaply again. Heck, inflation could go higher than your fixed rate mortgage and then your mortgage would actually make money for you! You'd be paying back the loan with dollars worth less value than the dollars you borrowed.

Maybe I don't understand something, but if that is what happened, then I think people are simply suffering the consequences of their own poor choices. I don't see why somebody is entitled to my sympathy. Why is this Bush's or the government's fault?

It reminds me how somebody I know uses her credit cards to pay cell phone bills. When all the credit cards are maxed out and bills can't be paid, she fixes the problem by getting another credit card. In her mind she can't help it and she has no choice. She will never be rich and it is somehow because the rich are screwing the middle class.

Sorry, people. You can't outlaw "stupid"

[Herb Schaffler]

You're right Perot, but also in some cases because of higher utility bills, people are having to walk away from their houses.

[PeroW-Cheney]

Yes. If other bills go up, that is different. If China dumps steel under cost onto the market and you lose you job, that is different too. The type of mortgage you picked is irrelevant in that case.

Some homebuilders hide your escrow account from your attention by basing the property value on the land as if there was no house there. Suddenly, the auditor adds your house and now you need to add thousands to your escrow account to cover the shortfall. Your fixed rate mortgage goes up every month. I think that is a problem. Salesmen hide that to get a house sold.

I just saw a Clinton soundbyte talking about this and it seemed to me that he's pandering again.

[Dhorner]

You have to take into account, the reason they were in this mess in the first place. It's because they were spending money they didn't have... Then in order to get out of debt, they were using the real property as a bank, each time they get into this mess, their credit rating goes down, so therefore, in the end the only thing that is offered is an ARM.

[drig23]

There were two parties who did dumb things; the borrowers took loans without understanding the terms, and the lenders gave money to people who they knew couldn't pay it back. If this was an isolated thing, we'd all shrug and get back to our lives. But, it's affected so many people that it's affecting the economy as a whole. Look at this article:
[LINK POSTED BY MEMBER] Only Members Can View This No Hillary For President Forum Link.
Countrywide Home Loans is cutting 12,000 jobs due to this. Those 12,000 people didn't make the bad loans.

Citigroup is also in trouble.
[LINK POSTED BY MEMBER] Only Members Can View This No Hillary For President Forum Link.
They might be bailed out by the Saudis. You remember...where Osama Bin Laden came from?

Buying a house is a good thing. It is the largest way that Americans invest. If you go back to the various state of the unions and search for "home", you'll see that Pres. Bush uses home ownership as a metric of economic viability. With good reason. It's a great metric for the health of the economy as a whole since it represents the actual worth of the people buying the homes. A whole bunch of people losing their homes undoes this gains we'd seen over the past half decade.


-Dave

[WiseOne]

That's true, it is a good indicator of the overall economy. Remember, the fact is these loans were given to grown men and women...they (the borrowers) have their own duty to research what is best for them and THEY are the one's who should pay the consequences, not the rest of us. Heck, I'm a dummy and even I knew not to get an ARM and got a FIXED rate at 5.785%...so, if I can do it ANY dummy should be able to, LOL. American's think they are all soooo smart, but when it comes to something like this, WHOOPS, I didn't know! Uhuh. BS. If American's are THAT stupid, we are in deep poo then. I cannot believe these companies even let this happen...they all deserve to go bankrupt because they KNEW ###### well it wouldn't last! Amazing.

Well, just be glad that Hillary has here ENORMOUS, million(s) dollar mansion and that John Edwards has his $6 million dollar mansion...they are set. When those two say they are for the little man, it makes me sick to my stomach.

[Herb Schaffler]

I think people have become so accustomed to the government taking care of them that they have not learned to take care of themselves. I believe Hillary will reinforce this. She thinks people can't take care of themselves, only she in her infinite wisdom can take care of us.

[drig23]

It's a little tough to have sympathy for people who signed these mortgages when they knew they couldn't pay them. There's certainly a lot of evidence showing the lenders lied to the borrowers. Heck, when I got my house my lender told me that ARM prices would never go up. Luckily, I'm not that stupid. I can see where a sizable minority of the people who can't afford to pay back their loans were tricked into it. Even knowing that, I'm finding it tough to have much sympathy. The government isn't here to protect the stupid from themselves.

My anger over this situation, though, isn't targeted at the borrowers. It's the lenders who are really at fault. Countrywide lost 85% of its value. Why? Because it knowingly inflated it's value by selling mortgages it knew the lenders couldn't afford. Now, it's come back to bite them on the ###. Boo-freakin'-hoo for them. But, it's the people who had pensions, mutual funds and jobs with Countrywide and the other lenders and underwriters that are hurt.

Some of New York's agencies are suing Countrywide and its underwriters (including Citi Group). [LINK POSTED BY MEMBER] Only Members Can View This No Hillary For President Forum Link.

I agree with this approach. If you defraud your investors, and you lie to your customers, you should pay for it. A bail-out makes no sense at all. If Eliot Spitzer was still AG and not screwing up the Governor's job, it might actually work.

I think the "stimulus" plan is nothing more than another political power grab. The Dems want to give money to their base. The Republicans want to solidify the tax cuts. None of it has anything to do with fixing the #### issue. Feh. When do we get to feed the whole lot to the lions?

My fix for the situation?

1) Sue the crap out of Countrywide, Citi, Goldman Sachs, etc. Consider it a financial version of our attack on Afghanistan...reprisal and punishment.

2) Take that $150B the Congress is about to piss away and invest it in rebuilding the nation's infrastructure. That gets money into the hands of the large contracting companies (yes, I'm a Dem who actually like Bechtel and Halliburton, I just don't like preferential treatment) and gives jobs to the average working Joe, and it repairs roads, bridges, dams and levees. It gets money into the economy in a much more targeted and efficient manor than rebates and tax cuts.

3) No new regulations, just new lawsuits. Make it clear that good business practices are voluntary, but painful to ignore.

-Dave

[nohil-billy]

Wow Drig, I agree with you whole-heartedly. How the hell did that happen?

[hrdman2luv]

There are a lot of factors involved with the loss of a home. Inflation, fuel cost, loss of a job, divorce, and not being able to re-locate after the loss of a job.
If one community suffers the loss of a plant closing, they are stuck if there isn't enough jobs to fill the loss of the plant closing.
I think some of you guys may not be taking into account of some of these things. I get the feeling that you guys have the impression that a lot of these people who are losing their homes are just not wanting to pay their mortgage. But the loss of a home is a very dramatic thing to happen. And no one wants that to happen to them. And for the most part, I would say that something out of the control of the home owner has happened.

Also, a lot of these things could be, in part, the responsibility of the Bankruptcy bill that the GOP passed a few years ago, that allows credit card companies to charge something like 40% if payments are one day late. ( I maybe mistaken, but I think that some of these sub-prime mortgages are the same way(with the increase in interest rates)). Therefore creating a huge impact one ones monthly that may already be in stress from the increased inflation.

Don't dismiss these people as being lazy and looking for a government hand-out. I know that's the easy way, to blame American's first, but I think there is a lot more to losing a home (in most cases) than just being lazy or un-responsible.

Like I said, what I think doesn't matter, but thats what I think.